Which of the following statement is true?

Statement 1- Current account records all those transactions between residents of the country and rest of the world which results in change in the assets or liabilities of the residents of the country or its government.

Statement 2- There are 2 components of current account: Balance of Trade and Net Visibles.

Neither statement 1 nor statement 2 is true

The correct answer is Option 4: Neither statement 1 nor statement 2 is true

Statement 1: "Current account records all those transactions between residents of the country and rest of the world which results in change in the assets or liabilities of the residents of the country or its government." This statement is not true. The current account primarily records transactions related to the trade of goods and services, income, and unilateral transfers, but does not involve changes in assets and liabilities. Changes in assets and liabilities are recorded in the capital account.

Statement 2: "There are 2 components of current account: Balance of Trade and Net Visibles". This statement is incorrect. Balance on Current Account has two components viz ·Balance of Trade or Trade Balance and Balance on Invisibles.